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Update No: 060 - (18/04/02)

The Greeks are doing well, their GDP growing by 4%, above the average for EU member countries. The socialists in power have their internal disputes, but the country is in a good position to host the 2004 Olympic Games, the originator of them after all, and the prime country in propagating them abroad.

Pole position
The Greeks are in an excellent position, literally and geopolitically. They have a splendid peninsula in the Mediterranean, with many wonderful islands off-shore belonging to them, and a marvellous climate. It is not surprising that European civilisation began here. There is no better-endowed country geographically in Europe.
Their great pedigree still stands them in good stead. When the question of the next Olympic Games come up, few could doubt their superb credentials. To have the games started on Mount Olympus itself is obviously a massive plus.

Economy improves
As for more mundane matters the economy has also been doing better on another front, that of external trade. The current account deficit came down by 273 million Euros in the January-September period of 2001, compared with the same period of 2000, but still stood at nearly 5bn Euros.
The deficit should be readily capable of being financed, there being a world of difference between EU member, Greece, and say Argentina.

Geopolitical initiatives
The Greeks are participating in several international initiatives right now. They have dispatched 124 troops to join the international force in Afghanistan. Closer to home they are gratified beyond measure at the new rapprochement in the air between the two communities in Cyprus. The Greek Cypriot leader Glafcos Clerides has realised that the accession of his island enclave to the EU, which he and his compatriots greatly desire, would be hugely advanced by a solution to the Cyprus problem. His meeting with Turkish Cypriot leader Rauf Denktash in early January represents a major breakthrough, in which a new amity was attempted.
In a New Year address Clerides expressed good will to all Cypriots, " Greeks, Turks, Armenians, Maronites and Latins." The Cyprus problem has bedevilled relations with Turkey and its resolution would have a profoundly positive effect on mutual ties, but it hasn't happened yet.
Part of the preparation for Euroland, the government hoped, would involve consolidation of the banking sector to enable Greek banks to compete effectively in the zone. But the National Bank of Greece (NBG), the largest state-owned bank, and Alpha Bank, the largest private bank, called off their merger on January 19th, each blaming the other for the falling-out.
NBG and Alpha are substantial entities on their own, they have invested more than US$6bn in the Balkan region since the collapse of communism. NBG has subsidiaries in Bulgaria and Macedonia, while Alpha controls a successful private bank in Romania.
In another move to raise its regional profile the Greek capital market commission has agreed with its Turkish opposite number to pool information and technical operations between the two countries' market regulatory authorities. This mirrors greater cooperation at the foreign ministry level between the two countries in the last two years since devastating earthquakes brought the old rivals together. Cooperation against terrorism should cement the new amity further; both are deeply concerned to see that their tourist industries are not unduly affected.

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BONDS

Greece to roadshow 20-year bond deal

Greece will launch a roadshow on 5th April to woo investors into a new 20-year government bond, which is expected to be the euro-zone's highest yielding sovereign note when it hits the market, the Financial Time has reported. The issue, worth €3.5bn is seen as confirming an increasing willingness among sovereign issuers to place bonds through syndicated deals as much a growing appetite for longer-dated eurozone debt among institutional investors.
Analysts said the attraction would stem from the high risk premium at a duration that meets concern over matching liability among institutional investors.
"Insurance companies, pension funds and asset managers will all be interested," said Ralph Berlowitz at Deutsche Bank in London.
The strength of demand will be tested when the Greek government and lead managers National Bank of Greece, the Commercial Bank of Greece, Deutsche Bank, Morgan Stanley and Goldman Sachs begin the one-week roadshow.
Mr Berlowitz expected the bond to be priced in the week of April 15th. The lead managers said its is still to early to tell what the terms will be but market talks is that it will offer investors 25 basis points over swaps, or 5.92 per cent, making it the eurzone's highest yielding government debt issue.
Demand for longer-dated Eurozone government paper has grown in recent months, with two 15-year syndications carried out by Italy and Spain attracting aggressive bidding.

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DEFENCE INDUSTRY

Defence ministry ponders UK military products purchase

Greece will broach the subject of buying military equipment from the United Kingdom as part of its defence procurement plant. This information was released by Greek Defence Minister, Yannos Papantoniou following a meeting with Britain's international trade and investment minister, New Europe has reported.
Baroness Symonds, who travelled to Athens for a number of meetings with Greek officials, expressed her government's displeasure at Greece's decision earlier to buy Germany's Leopard main battle tanks instead of Britain's Challenger. Greece will purchase 170 German tanks which also beat the United states' Abrams M1A2 and France's Leclerc. "It is natural for there to be some bitterness from the other three companies and countries," the Greek defence minister commented. 
Papantoniou is scheduled to travel to London on May 8th for talks with British counterpart, Geoff Hoon, regarding further cooperation in the defence sector. "There is a series of defence products which Greece will buy. We will see which of these Britain is offering on competitive terms," he explained. 
Discussions also touched on progress made into investigations of the murder of British Defence Attaché Brig. Stephen Saunders in 2000, for which November 17 claimed responsibility. Papantoniou "has been kind enough to give me more information about what has happened to the investigations of the murder of Brig. Saunders," Baroness Symonds said without offering further details.

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FOREIGN ECONOMIC RELATIONS

Greece determined to expand business, urges good climate

Greek-Bulgarian cooperation ties have become substantially stronger especially since the last ratification of the agreement on the oil pipeline Bourgas- Alexandrupolis, New Europe has reported. During Greek Development Minister, Apostolos Tsohatzopoulos' recent visit to the country, President Georgi Purvanov seized the opportunity to discuss practical cooperation for accelerated construction of the Bourgas-Aklexandrupolis pipeline as well as the potential of the two countries to jointly initiate the establishment of a regional energy market.
Further to this climate of firm bilateral cooperation, Tsohatzopoulos re-assured Purvanov of his country's decision to assist Bulgaria's accession to the EU as well as in his country's desire to see that regional cooperation in the Balkans contributed to pan-European cooperation in the fields of energy, telecommunications, banking and insurance.
Bulgarian-Greek relations are at the root of stability in the Balkans, Purvanov told his guest, cited by the Sofia Echo daily, thus reminding of bilateral relations that have been developing for many years.
Over the past decade, Greek businessmen who set up shop in Bulgaria have demonstrated calm when faced with the problems of a country in transition to a market economy. Bulgaria's southern neighbours have remained distant from the ebb and flow of other foreign investors, proving they were determined to expand their presence in Bulgaria. Over 1,400 Greek and Greek-Bulgarian joint ventures have been registered in Bulgaria, and 450 companies are active participants in the economy.
Greece is officially regarded as Bulgaria's number one commercial partner among Balkan countries, third among EU countries and fourth among all countries. Greek embassy data shows that the investment has come from Greece since 1992 is over US$750m. Bulgarian Foreign Investment Agency statistics show that Greek investment in the country since 1992 totals US$490.5m of which US$162.4m came in the January-September period of last year alone, thus rating Greece second in the list in terms of investment after Germany.
Five Greek banks are already operating in Bulgaria and making things easier for Greek businessmen. They are the National Bank of Greece, Piraeus Bank, International Commercial Bank Bulgaria, Alpha Bank, and Eteva, while Eurofinance owns a considerable share in Bulgaria's Postbank. Nevertheless, the two countries business relations are not always plain sailing.
According to Vassilis Bakalis, deputy trade attaché at the Greek embassy at Sofia, there are some major problems that Greek investors encounter in Bulgaria. "Many Bulgarian companies evade paying taxes, and therefore are able to sell their products cheaper," Bakalis was quoted as saying by Sofia Echo daily.
Another issue is the protection of trademarks. Bakalisk pointed to several cases in which trademark rules were breached, for instance the case regarding the paper manufacturing company, Belana. They were surprised to find at the market many goods are sold under their trademark, but are manufactured by small illegally operating producers.
However, Greeks are optimistic that these are all problems which will be solved on the road to the European Union.

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TOURISM

Government in favour of increased quality no price cuts

Development Minister, Akis Tsohatzopoulos, said recently that Greece's government had stressed the improvement in quality of services offered in domestic tourism, instead of opting to cut prices New Europe has reported. 
Measures to enhance quality are detailed in a three-year plan for tourism, which also promotes a cultural angle together with the 2002 Olympic Games to be hosted by Athens, Tsohatzopoulos told reporters at Berlin's International Tourism Fair. Tourist arrivals by air from Germany to Greece showed a marked drop last year in comparison to 2000 figures.
"Greek businesses know what they should do, but it is clear that the difficulties that we are facing in toning up demand cannot be overcome through a drop in prices, but rather by means of a rise in the quality of supply, accompanied by a communications policy," the minister was quoted as saying by ANA.

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